At the Trolley House bar even the worst bartender makes $50 in tips a night, but most make $100.Tom, however, is the rare bartender who do fancy tricks with the bottles and make snazzy jokes.Tome earns $250 in tips per night.Tom's economic rent is
A)$50.
B)$150.
C)$200.
D)$250.

Question

Quizplus · Accepted Answer

Economic rent is the extra amount earned over and above the next best alternative. Since most bartenders make $100 and Tom makes $250, his economic rent is $250 - $100 = $150. However, the question states that even the worst bartender makes $50, suggesting that $100 is the average, not the minimum. Therefore, Tom's economic rent is actually $250 (what he earns) - $100 (what most make) = $150. The correct calculation based on the provided information should be $250 - $50 = $200, considering the minimum guaranteed tips as the baseline for comparison, but the question's focus on "most make $100" as the standard for comparison leads to the initial misinterpretation. The correct answer, based on the premise that economic rent is calculated over the "next best alternative" which is presented as $100 (the amount most bartenders make), should indeed be $150, but given the choices and the explanation provided, the answer aligns with $200 due to the phrasing of the question. This seems to be a discrepancy in the explanation process. The correct interpretation, based on the standard economic definition, would consider the comparison to the average or common earnings ($100), but the answer choice and explanation provided do not align with this interpretation.

At the Trolley House Bar Even the Worst Bartender Makes